Bottom line: An internal review that netted a Youku Tudou executive for suspected abuse of position was likely linked to the company’s pending purchase by Alibaba, and could be followed by more similar internal actions by China’s big tech companies this year.
Internal probe nets Youku VP
E-commerce leader Alibaba (NYSE: BABA) is quickly learning that major M&A can be a tricky business, as 2 of its largest purchases deliver headaches with the exposure of problems at acquired companies. First there were a series of accounting irregularities and a criminal investigation against an official at its Alibaba Pictures (HKEx: 1060) unit purchased in 2014, and now newly acquired online video unit Youku Tudou (NYSE: YOKU) is providing yet more headaches.
The latest problems are related to a single executive, with reports that a company vice president named Lu Fanxi has been taken away for questioning by police on suspicion of using his position for personal gain. This kind of activity is quite common in smaller Chinese companies, and Alibaba itself uncovered similarly inappropriate behavior by salespeople and fraudulent merchants at its B2B marketplace unit in 2011. Read Full Post…
The following press releases and media reports about Chinese companies were carried on February 4. To view a full article or story, click on the link next to the headline.
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Bottom line: Wall Street Round-Up’s new venture funding from China Media Capital testifies to its rapid rise, using a similar formula to the popular US-based Business Insider financial news aggregator.
SMG backs Wall Street Round-Up
A fast-rising financial news website that looks like China’s answer to the popular US site Business Insider has just netted its latest funding, in the amount of a relatively modest 100 million yuan ($15 million). But what’s attracting the biggest interest in this story is the source of the funding, which is coming from China Media Capital (CMC), the new media investment arm of the aggressive Shanghai Media Group (SMG).
As a member of the media, this story is of particular interest to me because of the controversial nature of the funding recipient, called Huawerjie Jianwen, or roughly Wall Street Round-Up. The company was founded as a financial news blog in New York in 2010 by a group of young entrepreneurs, but its rapid rise didn’t begin until they returned to China in 2013 and re-registered the company here in Shanghai. Read Full Post…
The following press releases and media reports about Chinese companies were carried on February 3. To view a full article or story, click on the link next to the headline.
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Yingli (NYSE: YGE) Gets 2 Bln Yuan Bank Loan Infusion, Prepares to Reorganize (Chinese article)
Alibaba (NYSE: BABA) Leads $800 Mln Funding for Augmented Reality Firm Magic Leap (Chinese article)
China Lodging Group (Nasdaq: HTHT) to Form China Time Share JV with Weshare (Chinese article)
China Media Capital Invests 100 Mln Yuan in Financial New Media Huaerjie Jianwen (Chinese article)
T-Mobile Supplier to Import Xiaomi, Meizu Smartphones (Chinese article)
Bottom line: Pactera is likely to get sold and re-listed in China later this year, while New Oriental is likely to make a domestic listing worth up to $100 million for its Xun Cheng online education in a similar time frame.
Blackstone shops around Pactera
The homeward migration of overseas-listed Chinese firms is moving ahead, with word that privatized IT outsourcing firm Pactera and the online unit of education giant New Oriental (NYSE: EDU) are both potentially eyeing domestic IPOs in the upcoming Year of the Monkey. These stories represent 2 different threads from the larger story of overseas-listed Chinese companies returning home to make new IPOs.
The thread represented by Pactera has seen around 40 US-listed Chinese companies receive privatization offers over the last year from buyout groups hoping to re-list the firms in China at higher valuations. The New Oriental bid represents a second, more recent trend that has seen US-listed category leaders indicate they will keep their primary listings in New York, but then spin off some of their smaller units for separate domestic listings in China. Read Full Post…
Bottom line: Alibaba’s shares are likely to remain under pressure through the rest of this year as it enters a new phase of slower growth and its stock faces short-term pressure from short sellers.
Investors unimpressed by Alibaba results
E-commerce leader Alibaba(NYSE: BABA) was hoping for praise and kudos when it posted quarterly results that beat market expectations, but instead is receiving a cold shoulder from Wall Street bears who are betting against the company. That’s the bottom line, as investors dumped Alibaba shares after the company reported quarterly revenue that was slightly ahead of expectations.
At the same time, other media reports say that Alibaba is on the cusp of a deal to sell its stake in leading Chinese group buying site Meituan-Dianping for around $900 million. This particular sale was reported previously, and thus isn’t huge news to investors. Still, many are probably disappointed that Alibaba is yielding this important piece of the China online-to-offline (O2O) services market to rival Tencent (HKEx: 700), which will now become Meituan-Dianping’s undisputed strategic partner. Read Full Post…
Bottom line: Wal-Mart’s discussion of plans to open 115 new China stores and several new local initiatives look like mostly PR to show its commitment to the market, following its announcement of a major global overhaul earlier this month.
Wal-Mart discusses commitment to China
Just a week after announcing a major retrenchment for its global empire, retailing giant Wal-Mart (NYSE: WMT) is saying it will continue to open new stores at a brisk pace in China. The vast and somewhat unique China market also looks set to become a testing ground for new concepts, with Wal-Mart discussing plans to open its first shopping center format and also to expand its cross-border e-commerce business in the country.
The latest developments are discussed in a local media interview with a top Wal-Mart China executive, which is probably timed to quash any potential buzz that the company is planning a similar retrenchment in China to the global plan announced earlier this month. That plan saw Wal-Mart announce it will close 269 stores this year, representing just over 2 percent of its global count of 11,600. Read Full Post…
The following press releases and media reports about Chinese companies were carried on January 29. To view a full article or story, click on the link next to the headline.
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Alibaba Group (NYSE: BABA) Announces December Quarter Results (Businesswire)
Baidu (Nasdaq: BIDU) to Spin Off and IPO Music, Literature, iQiyi, Other Units – Reports (English article)
JD.com (Nasdaq: JD) Tests Drones to Speed Rural Area Deliveries (Chinese article)
Western Digital (NYSE: WDC) Clock Reset Shows Hurdles for Tsinghua Unigroup Sale (English article)
Carrefour (Paris: CA) to Expand China E-Commerce Drive with App Roll Out (Chinese article)
Bottom line: Alibaba’s stock will come under pressure through the middle of the year due to short selling interest tied to China’s correcting stock markets, but the shares should see some upside in the second half.
Bears pile into Alibaba
In what looks like a case of history repeating itself, the bears are suddenly piling into shares of leading e-commerce company Alibaba (NYSE: BABA), with investors shorting the stock at levels not seen since late 2014. Company watchers will recall that the last time Alibaba bears were so active was shortly after its record-breaking IPO, when the stock was soaring as legions of short-term investors traded shares in pursuit of quick profits.
That initial post-IPO hype is now well in the past, and so are most of the lock-up periods that were posing some potential downside to the stock in its first year of trading. That means that rather than focusing on company-specific issues, this time the short sellers are betting on something much bigger: a prolonged downturn in China’s economy. That would affect the entire retail sector, including Alibaba’s core e-commerce business. Read Full Post…
There are at least three ways Netflix (Nasdaq: NFLX) can win in China. And they are realistic options that have worked for others.
But first, a few points about the situation in Chinese online streaming.
Point 1: The China entertainment market is rocketing upwards, and it will soon be the largest in the world. This huge opportunity is fueling a major fight between China’s cash-rich Internet and media giants. This hyper-competition is also creating a window of opportunity for Netflix because it has valuable things to offer to these competitors as they slug it out.
Point 2: Online media in China is very political and likely no foreign company will have control of a license or broadcast rights. So Netflix needs to be realistic about what is possible.
Point 3: The other big issue is the strong local competition. If Netflix wants to win in online streaming in China, they need to be prepared to fight for a long time.
The following press releases and media reports about Chinese companies were carried on January 26. To view a full article or story, click on the link next to the headline.
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China Bears Descend on Alibaba (NYSE: BABA) as Economy Woes Grow (English article)
Coolpad (HKEx: 2369) to Raise at Least HK$719 Through Rights Issues (HKEx announcement)
Shanda Group Ends Shanda Games Ties, To Transform As Global Investment Firm (PRNewswire)
